Why Your Nonprofit Needs a Theory of Change & How to Make One

By Drew Reynolds
Aug 6, 2019 • 6 min read

This article was contributed to our Village Vitals monthly newsletter by Drew Reynolds. This monthly newsletter aims to connect churches, nonprofits, and other organizations with today's best practices and professional insight, helping them grow their knowledge, gain new perspectives, and drive innovation. 

Drew Reynolds is the CEO of Common Good Data Consulting. He helps nonprofits in education, health, and human services solve social problems through data-driven decision-making. He also runs the Nonprofit Impact Strategy online program, the comprehensive program for nonprofit professionals looking to use data to demonstrate impact.

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As a nonprofit professional, you know that demonstrating the impact of your organization’s mission. Being able to explain clearly and succinctly what you do, how you do it, and the results you achieve not only builds the trust and credibility to engage funders, grant makers, and donors to support your work, but also communicates to the broader community how you are making a difference in your cause area.  

So how do you demonstrate impact? One critical piece of the impact puzzle is something called a theory of change - sometimes referred to as a logic model.

A theory of change is a set of sentences or a visual diagram that describes how you bring about change in your cause area. It explains how you help the people and communities you serve get from point A to point B.

But making one can be complicated. When I work with nonprofits, I hear a lot of reactions to the term theory of change:

“We did one 10 years ago, but I can’t remember where it is!” or “Wait, what’s the difference between an output and an outcome anyways?

So, I thought I’d share how to create a rock-solid theory of change that will build your nonprofit’s data-driven capacity and advance your nonprofit’s mission.


Writing Goals

The first step in developing a theory of change is to write two to four goals for your nonprofit. Goals are simply what you hope to achieve, written out in a specific and measurable way from the perspective of the people your nonprofit serves. You may have heard about SMART goals, that they should be specific, measurable, achievable, relevant, and timely. Some sources use different terms, but this more or less captures what each goal should include.

That being said, there’s something I think that is missing from SMART goals that I think every nonprofit should do:

Write your goals from the perspective of your client.

Let me explain. Often, you’ll hear a nonprofit state a goal like, “We’re going to reduce homelessness by 50% in 5 years.” This probably meets SMART criteria, but by phrasing it from the perspective of the nonprofit, we focus on what the nonprofit does, not the clients receiving services or participating in programs. Our minds immediately start to think about the nonprofit as the change agent rather than the clients as having agency over their own change process and personal development.  

I’ll be honest: I’ve worked in the social sector for more than a decade, and I just don’t believe that nonprofits are the ultimate source of positive change. Anybody who has day-to-day interactions with clients in their cause area will tell you that, ultimately, change has to come from the client. Nonprofits provide the critical resources and support needed to foster change. But at the end of the day, clients do the work of change themselves.

So back to goals. What if we rephrased the goal to “Our clients will be able to transition from homelessness to stability through their participation in our XYZ program?”

Do you see how that changes the conversation? Instead of thinking about what programs and services the nonprofit is going to offer, we focus instead on the change process that has to occur within the client to be able to realize the positive outcome.

My intention is not to overemphasize client deficiencies. In the case of homelessness, many individuals and families fall into hardship due to environmental circumstances, not necessarily individual faults. But ultimately it is the individual, who through their own agency responds to available resources and new environments created by the nonprofit and ultimately brings about their own new positive future. And writing goals from the client’s perspective places the focus where it should be: on the change in the client, not the activities of the nonprofit.


Linking Goals to Outcomes

Now that you have your goals, it’s time to think about how you’re going to measure progress toward these goals. We do this by defining outcomes.

Outcomes are the indicators of success as defined by your goals. They are the results of the work you have done and show the progress that the participants in your activities have made. A good outcome might be something like the growth in a student's GPA, the percentage of participants who are staying sober after completing a substance use treatment program, or a reduction in the number of violent offenses in a neighborhood or community.

There's a very important distinction to be made between outcomes and another term used in theories of change — outputs — especially as you think about measurement and impact.

Outputs are the things you do and the people you serve. In measurement, you might think of number of people who received a service or good, the number of trainings or events you put on, or the number of volunteers who participated in your efforts.

Outputs are what you do, outcomes are the results of what you have achieved.

Because your goals are written from the perspective of the client, it becomes much easier to distinguish between outputs and outcomes. Nonprofit-centered goals tend to be outputs — the number of people you serve, the number of activities or trainings held, etc. Client-centered goals tend to be outcomes — what the client is now able to do as a result of interacting with your nonprofit that they would not have been able to do otherwise.

As you develop your theory of change, make sure that you measure progress over time (i.e. short-, middle-, and long-term) and that each goal you write has a corresponding measurable outcome.


What You Do: Outputs

Put simply, outputs are (1) the things you do and (2) the people who do them with you. These are sometimes referred to as activities and participants.

There are a lot of logistics and planning that go into activities. In a theory of change, be sure to stay high-level, without going into too many details. Later on, you may want to put together a program manual or some other type of document that explains the day-to-day of running a program.

When thinking about participants, I’d recommend that you be as specific as possible and use it as an opportunity to start thinking about the people your nonprofit will serve. Being focused and clear on who your ideal people are will help you better target, market, launch, and share your programs, services, and activities


What You Need: Inputs

Inputs are the resources, people, and materials you need in order to launch some type of activity or program. Think staff, office space, and supplies.

Writing out a list can be helpful in a theory of change as it can also help answer some logistical questions around budgets, space, and resources critical to planning and launching a new program or service. It also makes clear to potential investors how their money will be used and, in turn, lead to positive social outcomes.


Theory of Change or Logic Model?

Both theory of change and logic model can be used interchangeably, but there are some subtle differences in use.

You are more likely to hear the term theory of change used to describe the change process across an entire organization. It also tends to be less detailed and more about telling the broader story. Logic models tend to be more specific and often focus on a specific program or service rather than on the organization as a whole.

However, both contain the core elements of goals, outcomes, inputs, and outputs. For your organization, use a theory of change when presenting to outsiders and painting a broad vision of how you create positive impact, and use a logic model to spell out the details during an internal staff meeting. 



Theories of change can be complicated, but once you have these key pieces in place, you’ll be in a much better position to clearly show how you make a difference in your cause area. Keep your theory of change close by and bring it to meetings with funders and stakeholders so that you can share with them how their investment in you will bring about positive social change.

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